Critical Survey: Commerce Bancshares (NASDAQ:CBSH) & German American Bancorp. (NASDAQ:GABC)

Commerce Bancshares (NASDAQ:CBSH) and German American Bancorp. (NASDAQ:GABC) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, earnings, profitability, risk, analyst recommendations, valuation and dividends.

Analyst Recommendations

This is a summary of recent ratings and price targets for Commerce Bancshares and German American Bancorp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Commerce Bancshares 2 3 0 0 1.60
German American Bancorp. 0 0 1 0 3.00

Commerce Bancshares currently has a consensus price target of $61.09, indicating a potential upside of 4.72%. German American Bancorp. has a consensus price target of $31.00, indicating a potential upside of 6.09%. Given German American Bancorp.’s stronger consensus rating and higher possible upside, analysts plainly believe German American Bancorp. is more favorable than Commerce Bancshares.

Insider & Institutional Ownership

63.1% of Commerce Bancshares shares are owned by institutional investors. Comparatively, 38.5% of German American Bancorp. shares are owned by institutional investors. 3.6% of Commerce Bancshares shares are owned by company insiders. Comparatively, 7.9% of German American Bancorp. shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

Commerce Bancshares has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, German American Bancorp. has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Valuation and Earnings

This table compares Commerce Bancshares and German American Bancorp.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Commerce Bancshares $1.39 billion 4.64 $433.54 million $3.78 15.43
German American Bancorp. $170.82 million 4.28 $46.53 million $2.14 13.65

Commerce Bancshares has higher revenue and earnings than German American Bancorp.. German American Bancorp. is trading at a lower price-to-earnings ratio than Commerce Bancshares, indicating that it is currently the more affordable of the two stocks.

Dividends

Commerce Bancshares pays an annual dividend of $1.04 per share and has a dividend yield of 1.8%. German American Bancorp. pays an annual dividend of $0.68 per share and has a dividend yield of 2.3%. Commerce Bancshares pays out 27.5% of its earnings in the form of a dividend. German American Bancorp. pays out 31.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Commerce Bancshares has raised its dividend for 50 consecutive years and German American Bancorp. has raised its dividend for 6 consecutive years.

Profitability

This table compares Commerce Bancshares and German American Bancorp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Commerce Bancshares 29.90% 15.02% 1.69%
German American Bancorp. 26.91% 12.37% 1.43%

Summary

Commerce Bancshares beats German American Bancorp. on 11 of the 17 factors compared between the two stocks.

Commerce Bancshares Company Profile

Commerce Bancshares, Inc. operates as the bank holding company for Commerce Bank that provides retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals and businesses. It operates through three segments: Consumer, Commercial, and Wealth. The Consumer segment offers various banking products and services, including consumer deposits; consumer loans, such as automobile, motorcycle, marine, tractor/trailer, recreational vehicle, fixed rate and revolving home equity, and other consumer loans; patient health care financing; real estate loans; indirect and other consumer financing; personal mortgage banking; consumer installment lending; and consumer debit and credit bank cards, as well as provides online banking services. The Commercial segment offers corporate lending, merchant and commercial bank card, leasing, international, and investment safekeeping and bond accounting services; and business products, government deposits, and related commercial cash management services, as well as sells fixed-income securities to individuals, corporations, correspondent banks, public institutions, and municipalities. The Wealth segment provides traditional trust and estate planning services, brokerage services, and advisory and discretionary investment management services. The company also offers private equity investment, securities brokerage, and insurance agency services. It operates through a network of 320 locations in Missouri, Kansas, Illinois, Oklahoma, and Colorado, as well as commercial offices. Commerce Bancshares, Inc. was founded in 1865 and is headquartered in Kansas City, Missouri.

German American Bancorp. Company Profile

German American Bancorp, Inc. operates as the bank holding company for German American Bancorp that provides retail and commercial banking services. The company operates through three segments: Core Banking, Trust and Investment Advisory Services, and Insurance Operations. The Core Banking segment accepts various deposits from the general public; and originates consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, as well as sells residential mortgage loans in the secondary market. The Trust and Investment Advisory Services segment provides trust, investment advisory, and brokerage services. The Insurance Operations segment offers a range of personal and corporate property and casualty insurance products. As of February 13, 2018, the company operated 53 banking offices in 19 contiguous southern Indiana counties and 1 northern Kentucky County. German American Bancorp, Inc. was founded in 1910 and is based in Jasper, Indiana.

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